Research Of The Intrinsic Characteristics,Repurchase Motivation And Effects Of Jiahua Energy

Share repurchase,as an important capital exit mechanism and value distribution method,is increasingly valued by company management,market investors,and government regulators.Academia has a lot of research results on share repurchase,especially on the two aspects of repurchase motivation and market effect.Early scholars mostly focused on the motivations of listed companies for share repurchase.In recent years,they have gradually transformed into studying the characteristics of companies that conduct share repurchases.Domestic scholars have done little research on this issue.Research on the correlation between traits and their repurchase motivation is even more scarce.Statistics show that many companies that have launched repurchase plans have pledged a larg e proportion of their shareholders’ equity.The previous research on share repurchase did not involve equity pledge.What kind of influence the repurchase company’s large proportion of equity pledge has on its share repurchase behavior has become an urgent issue.This article takes Zhejiang Jiahua Energy Chemical Co.,Ltd.’s public market share repurchase event in China’s A-share market in July 2018 as the case study object.Based on the signal theory,agency theory,and market effectiveness hypothesis,it uses the literature research method and event research method.And financial index method,systematically analyze the internal characteristics and repurchase motivation of the case company,and explore the correlation between the two,ie,what kind of motivation will be generated under what intrinsic quality,and the long-term and short-term market effects and financial effects of repurchase.effect.The research results show that the case company has strong profitability,high dividend payment level and cash holding level,and inherent characteristics of a large proportion of equity pledge.The stock repurchase of the case company has the motive of maintaining the company’s stock price,effectively using free cash flow,avoiding the decline of the stock price after the lifting of the restricted stocks and alleviating the risk of equity pledge.There is a correlation between the intrinsic characteristics of repurchase companies and their repurchase motives,that is,under higher cash holding levels,there will be an incentive to effectively use free cash flow;under a large proportion of equity pledge,there will be a relief to the risk of equity pledge motivation.The share repurchase of the case company announced that there was a positive short-term market reaction and that information was leaked in advance,but there was no positive long-term market effect.The financial effect of the share repurchase of the case company is limited.Except for the obvious improvement in profitability,the financial indicators in other aspects have not changed much or even decreased.Finally,this article puts forward suggestions for stakeholders to fully understand,predict and regulate the share repurchase behavior of listed companies from the perspectives of management,market investors,and regulators of listed companies.